The Financial Post says, “Almost half of single family houses are losing value in the New York and Washington metropolitan areas, according to a new index created by Allan Weiss, co-founder of the Case-Shiller home price indexes, a sign that buyers’ tolerance for high prices in many large U.S. cities may be reaching a limit.
“A steady rise in U.S. home prices since the bottom of the market combined with weak income growth has made housing less affordable, especially in big cities. Credit remains tight and demand is now being driven primarily by buyers dependent on mortgages, as foreign buyers and investors pull back from the market.
“What happens in any bull asset bubble such as what we’ve seen is you run out of buyers,” said Chris Whalen, senior managing director at Kroll Bond Rating Agency Inc. and an adviser to Weiss. “It’s hard to get deals done if the bottom third can’t get a mortgage.”
On the other hand, Daniel Goldstein at Market Watch wrote, “a repeat of the 2009 real estate crash that followed the 2008 rout of the equities market is more unlikely this time.” Then he lists 5 Reasons (I added one more) why you shouldn’t be panicking if you’re looking to buy or sell a home:
- Interest rates should stay low – in fact that ¼ to ½ point increase in rates predicted is appearing less certain since the stock market fall.
- There’s less risk of a new mortgage bubble – liar loans and exploding ARMshave disappeared and banks have tightened their lending standards. Since the recovery homeowners have built up equity and are less likely to walk away from their homes.
- Help for first-time home buyers – The FHA has reduced insurance premiums and in an effort to nudge first-time home buyers andmillennial borrowers who might not have much cash for a down payment to finally enter the housing market. In addition, Fannie Mae and Freddie Mac began buying loans with just a 3% down payment, or 97% loan-to-value ratio.
- Under a key policy change that took effect last week, lenders nationwide now have more leeway to approve mortgages to borrowers who qualify under FHA’s underwriting guidelines but may have below-par FICO scores.”
- Lower oil prices – The continuing drop in gas prices is freeing up valuable disposable income.
- Job growth – the U.S. has had a slow but steady rate ofjob creation for the past five years.
Bottom Line: If you have a 20% down payment for a house, have six months expenses in the savings account, extra savings for the emergencies that a house can spring on you, credit cards are not maxed, and you find your dream house, then go for it.
Trusted Homebuyers is here to help homeowners out of any kind of distressed situation. As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.
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